5/09/2005 @ 12:00AM

Crying All the Way To The Bank

You can feel sorry for Thomas A. Renyi, who has been running the Bank of New York since 1997. A $6 billion Russian money-laundering operation, run by bank employees before he arrived, remains under investigation. The U.S. Attorney’s Office is looking into bank employees on Long Island who may have helped a leasing company bilk hospitals out of $200 million for medical equipment. A newly acquired financial services company faces lawsuits over mutual fund market timing. Over his tenure the bank’s stock has returned 6% a year, tying the S&P 500 and falling far behind the 13% annual return of other banking firms in our executive compensation survey.

But not too sorry. Renyi, 59, since 1999 has averaged $13.8 million a year in compensation. That’s seven times what SunTrust Banks pays L. Phillip Humann and twice what National City pays David A. Daberko for very similar jobs.

For this combination of mediocre results and gilt-edged paychecks Renyi ended near the bottom of our annual ranking of 189 chief executives in performance relative to pay.

When Renyi took over, he followed his predecessor’s plan to turn the enterprise from a commercial bank, making most of its money on deposits and business loans, into a securities clearing firm and money manager. Renyi’s biggest move was the 2003 acquisition of Credit Suisse First Boston’s securities clearing unit, Pershing, for $2 billion. Soon after, Pershing got hit with three class actions seeking unspecified damages for its role in the mutual fund timing scandals. The Bank of New York and Credit Suisse are fighting over who should be liable for any damages.

This year Renyi declined to take $1.7 million of his $4.7 million cash bonus, citing in the proxy statement issues such as the hospital bilking scam. Still, he took $4 million in cash and $4.9 million in stock. Earnings last year were up 24% to $1.4 billion.

Who is setting Renyi’s pay? The board’s compensation committee is supposed to be made up of independent directors only, but “independent” is defined expansively. Among the four members is media mogul John Malone. The Bank of New York has lent a combined $25 million to three Malone-controlled companies. So far it has had to write off $7 million (these were all separate corporations owned by Malone’s Liberty Media but responsible for their own debts), and it warns that it could lose another $10 million to a third, insolvent Malone company.

A bank spokesman declines to answer questions about compensation but offers: “The business model is working, and the company is once again delivering strong results.”

Bad Buys

Annualized Total Return

Chief executive officer/company

Tenure As Chief

During Tenure

6-Year

6-Year Average Compensation ($Mil)

Stock Owned

Peter Cartwright/Calpine

21

4%¹

-7%

$13.0

0.40%

Calpine posted net loss of $243 million for 2004; Cartwright earned $11 million in total compensation.

Steven R Appleton/Micron Technology

11

1

-13

9.3

0.06

Took pay hiatus from Oct. 2001 to Dec. 2003; stock down -49%. Earned $1.5 million in 2004; stock still off -20%.

Thomas A Renyi/Bank of New York

8

6

-2

13.8

0.19

The bank’s mutual funds are being investigated by the SEC. Renyi took home $13 million in total compensation.

Martin G McGuinn/Mellon Financial

6

-1

-2

5.5

0.28

Mellon sold off weak personnel consulting unit in 2005; McGuinn earned a $1.4 million cash bonus in 2004.

Lee R Raymond/ExxonMobil

12

15

11

22.8

0.04

Since 1999 Exxon’s stock returned less than the average company’s on our scorecard; Raymond’s pay was 2.3 times more.

Returns as of Mar. 31. ¹Return is for period less than tenure. Source: FT Interactive Data via FactSet Research Systems.